Rate Article:

The state-owned National Iranian Oil Company (NIOC) recently signed a $585 million buyback agreement with the local PetroIran company, providing for the renovation of the Forouzan and Esfandiar oil fields in the Persian Gulf, reported IRNA. The project’s target date of completion is set for 2005.

The renovation of the two fields, which Iran shares with Saudi Arabia, is expected to increase the fields’ daily output capacity from 40,000 barrels per day (bpd) to 109,000 bpd, according to NIOC associate Mehdi Mir-Moezzi.

The buyback deal with private firm PetroIran is similar to other Iranian oil and gas contracts with foreign firms, in which the developer earns back its investment and the profits through the sale of output. NIOC intends on selling 60 percent of the fields’ additional output in order to pay PetroIran for its services over a five-year period.

Up to date, Iran has signed billion-dollar buyback deals with several major international oil firms such as Anglo-Dutch Royal, Dutch/Shell, Italy's ENI and France's TotalFinaElf. Buyback deals have come under criticism by Iranian economists, claiming that they make the nation’s wealth too readily accessible to foreign enterprises since the outside investor recovers its investment from output. — (menareport.com)